Standard 17- Hoover’s Great Depression

SSUSH17 The student will analyze the causes and consequences of the Great Depression.

a. Describe the causes, including overproduction, underconsumption, and stock market speculation that led to the stock market crash of 1929 and the Great Depression.

b. Explain factors (include over-farming and climate) that led to the Dust Bowl and the resulting movement and migration west.

c. Explain the social and political impact of widespread unemployment that resulted in developments such as Hoovervilles.

25% of US population unemployedStock prices are greatly over-valued and the stock market is in ruins5,000 banks closed because they loaned out all their moneyMillions of people have lost jobs, savings accounts, homes and personal property.Foreign countries can’t make loan paymentsForeign economies have collapsed

Pretend you were President and your country’s unprecedented wealth suddenly

evaporated.American companies are not producing goods or servicesConsumer spending declinesThe size of the economy continues to shrinkA great drought is turning precious farmland into huge clouds of dust and within a year the Great Plains is ruinedA new political philosophy called Fascism is on the rise in Japan, Spain, Portugal and Germany.War looms on the horizon.

• 31st President 1929 to 1933• Republican

• Graduated from Stanford University 1895

• Occupation: Engineer• Food Administration Director

during WWI• Secretary of Commerce 1921-

28

• 31st President 1929 to 1933• Republican

• Graduated from Stanford University 1895

• Occupation: Engineer• Food Administration Director

during WWI• Secretary of Commerce 1921-

28

•“A chicken in every pot and car in every garage”.

Hoover quote in 1929

•“A chicken in every pot and car in every garage”.

Hoover quote in 1929

• Credit• The ability to borrow money to

purchase goods/services and to pay that money back over time

• Overproduction• When a business/national

economy produces more products or services than can be sold

• Underconsuption• When a person/national economy

is unable or unwilling to purchase products or services.

Vocabulary of the Great Depression

The US Economy is built on credit, without credit no one would have purchased radios, cars, washing machines, stocks, etc…

Why do we care?

The rapid increase of stock prices encouraged:

•Speculation, the practice of making high-risk investments in hopes of getting a huge return.

•Buying on margin, the practice of allowing investors to purchase a stock for only a fraction of its price (CREDIT) and borrow the rest at high interest rates.•When Stock Market begins to crash banks call in loans •To pay back banks investors sold stocks for less than they purchased•Loose money and go into debt•No US Government regulations on the stock market or margin buying.

• The Great Depression can be described as the total collapse of

the US economic system of Capitalism, laissez faire and everything we believed in as a

country.• Our democracy and way of life

was threatened.

CAUSES• Decrease in consumer

spending

• Unequal distribution of wealth

• Overproduction of goods

• Huge farms surpluses

• War debts not paid back

• Buying on margin (Credit)

• Stock Market Crash Black Tuesday,Oct. 23, 1929

EFFECTS• Under consumption of goods and

services---not buying goods

• Families had limited income to purchase goods

• Led to falling prices of goods

• Led to drop in farm prices

• Banks didn’t get back their $$$

• Speculation on stocks• Investors buy stocks on credit• Wealth on paper

• Total collapse of US economy, lassiez faire and capitalism

events

• Bankers call brokers wanting their money!

• Brokers go to investors to collect their money to pay the bank loans borrowed by broker for

investor

• Orders to sell any any price… swamped the market--nobody

would buy

• Brokers go under--stocks are worthless--investors loose their

savings!

• Run on the Banks: People begin to panic and go to banks---try to withdraw their money…Banks don’t have any money to give

back

• Banks close---people lost their savings

• Businesses close---could not pay back loans to banks.

• Workers loose their jobs

• No money to buy consumer products

• Sales fall---more businesses shut down

• More workers lose their jobs

domino effect

Great Crash

Investors

Businesses and WorkersInvestors lose

millions.

Businesses lose profits.

Consumer spending drops.

Workers are laid

off.

Businesses cut investment and

production. Some fail.

Banks

Businesses and workers cannot

repay bank loans.

Savings accounts are wiped

out.

Bank runs

occur.

Banks run out of

money and fail.

World Payments

Overall U.S. production plummets.

U.S. investors have little or no money to invest.

U.S. investments in

Germany decline.

German war payments to Allies fall off.

Europeans cannot afford

American goods.

Allies cannot pay debts to United

States.

Great Crash

Investors

Investors lose millions.

Businesses lose profits.

Great Crash

Investors

Businesses and WorkersInvestors lose

millions.

Businesses lose profits.

Consumer spending drops.

Workers are laid

off.

Businesses cut investment and

production Some fail.

Great Crash

Investors

Businesses and WorkersInvestors lose

millions.

Businesses lose profits.

Consumer spending drops.

Workers are laid

off.

Businesses cut investment and

production Some fail.

Banks

Businesses and workers cannot

repay bank loans.

Savings accounts are wiped

out.

Bank runs

occur.

Banks run out of

money and fail.

World Payments

Overall U.S. production plummets.

U.S. investors have little or no money to invest.

U.S. investments in

Germany decline.

German war payments to Allies fall off.

Europeans cannot afford

American goods.

Allies cannot pay debts to United

States.

Great Crash

Investors

Businesses and WorkersInvestors lose

millions.

Businesses lose profits.

Consumer spending drops.

Workers are laid

off.

Businesses cut investment and

production Some fail.

Banks

Businesses and workers cannot

repay bank loans.

Savings accounts are wiped

out.

Bank runs

occur.

Banks run out of

money and fail.

World Payments

Overall U.S. production plummets.

U.S. investors have little or no money to

invest.

U.S. investments in

Germany decline.

German war payments to Allies fall off.

Europeans cannot afford

American goods.

Allies cannot pay debts to United

States.

Effects of the Stock Market Crash

· Stock values drop from $87 - $19 billion· Steel production drops 80%· Industrial output drops 50%

· 500,000 homes and farms foreclosed· “Run on the banks”, 5,190 banks failed

· 9 million people lost their savings· Unemployment 25—40%

· 4 million by 1930----12 million by 1932· 25,355 businesses fail

· Work week cut----3 to 1 and lay offs.

domino effect

· People did not have savings…· Families fell behind on mortgages, rent and

credit payments…...· Lost their homes, businesses & possessions· A great drought turned precious farmland

into huge clouds of dust and within a year the Great Plains is ruined

· American values of hard work & individual responsibility were tested

· Standard of living of Americans reduced· Psychological effects on many Americans,

especially men.

domino effect

DEBTS

• US high tariffs (Hawley-Smoot Tariff) caused Great Britain

and France to not trade with US.

• US became “economic isolationist”.

• Because of this, Great Britain and France did

not pay back war debts to the US.

• GB and France defaulted on their debt because they had paid

in blood.

• US high tariffs (Hawley-Smoot Tariff) caused Great Britain

and France to not trade with US.

• US became “economic isolationist”.

• Because of this, Great Britain and France did

not pay back war debts to the US.

• GB and France defaulted on their debt because they had paid

in blood.

US INVESTORS

WALL STREET BANKER

S

GERMANYPRIVATE

LOANS

PRIVATE

LOANS

US TREASURY

GREAT BRITAIN FRANC

E

ALLIED

WAR DEBT

PAYMENTS

ALLIED

WAR DEBT

PAYMENTS

WAR DEBT PAYMENTSWAR DEBT PAYMENTS

“REPARATIONS”

“REPARATIONS”

Banks lost their investments in the Market after the Crash

Millions of Americans were caught in the panic of the Stock Market crash.

Went to their banks to withdraw their savings accounts.

Banks loaned out their $$$ and had no reserve funds to give customers

withdrawing their savings. Once banks ran out of $$$ they closed

their doors and left people stranded. 1929 = 659 and by

1933 = 5190

A Wise Economist Asks A Question

Bank failures crushed the average American who put faith in the banks to save their

money.When they went to

withdraw their money, it had been lent out so

they lost savings.

25% to 40% of workers out of work

Was able to lower it to

14%

FORECLOSURES

Because people lost their jobs they could not

make payments on their farms,

ranches or homes.

FORECLOSURES

Banks would foreclose on

their property and thousands

lost their homes

FORECLOSURES

Thousands of people became homeless and

workless.

FORECLOSURES

Many went to California to try and find work….

Hoovervilles or shantytowns, were migrant towns of people who were out of work and on the move to

find work. Usually outside large cities where migrants were trying to find jobs. Named after

President Hoover because he wouldn’t do anything to help the people who were in need…….

HOOVERVILLES

• William Swift, ex Farmer and his dog, Hooverville, near Circleville, OH

Douglas, Georgia• Unidentified South

Georgia tobacco farmer on the move with sons to Florida, D. Lange, 1938.

• Window is from Sharecropping farm in Walker County, AL

• One of the immediate concerns of FDR was to raise the self confidence of the people……..

• He had to get people back on their feet by putting them back to work……..

PSYCHO

PSYCHO

Run on the banks…….Bread and food lines………

• People lost their homes, possessions and property.• Families lived in Hoovervilles or shantytowns.

PSYCHO

• No hope, despair, emotional pain, depression and guilt.

• When you have millions of “unhappy” men out of work, you have the potential for

social chaos.

DEBTS

• Bonus Army March in the summer of 1932 over 20,000 veterans

from WWI marched on Washington, DC.

•Demanded their Bonus promised to them by the government for fighting in WWI.

•They were out of work and wanted to feed

their families.

DEBTS

•Bonus Army refused to leave Washington, DC until Congress gave them their Bonus. Congress voted not give the Bonus to the veterans.

• They were ordered to leave by President Hoover but disobeyed the order. Eventually, President Hoover would order the army to force these veterans out of Washington, DC

Battle of Washington• July 28, 1932

• President Hoover orders the army to remove Bonus Army

from Washington, D.C.

• General Douglas MacArthur, later a WWII hero, was part of removing the Bonus Veterans.

DEBTS

• August 28, 1932, Battle of Washington, D.C., US troops supplied with tanks fought skirmishes, made arrests and burnt down the camps of the Bonus veterans.

• The American people were appalled how President Hoover solved the problem. People felt Hoover had no compassion and would blame him for the Depression. He would not be re-

elected in 1932.

Political cartoon showing President

Herbert Hoover trying to deal with

the Great Depression (1930).

• The Dust Bowl was an ecological and human disaster that took place in the southwestern Great Plains region, including Oklahoma, in the 1930's.

• It was caused by misuse of land and years of sustained drought.

• Millions of hectares of farmland became useless, and hundreds of thousands of people were forced to leave their homes----many migrated to California.

•As the land dried up, great clouds of dust and sand, carried by the wind, covered everything and the

word "Dust Bowl" was coined.

Herbert Hoover Believed that federal government should

not try to fix people’s problems. He believed direct relief would destroy

people’s self-respect. He believed it would create a big

government which would violate laissez faire.

Franklin Roosevelt Believed government had a responsibility

to help people in need and provide direct relief.

Believed capitalism and laissez faire needed to be reformed.

Governmental involvement in people’s lives was a good source for those in need.

The Election of 1932The Election of 1932

•Democrat Franklin D. Roosevelt, beat the Republican, Herbert

Hoover, who was running for reelection.

• FDR promised relief for the unemployed, help for farmers and a balanced budget.

•Prohibition, whether it should be repealed

or not.

• FDR and Hoover at FDR’s inaugural

• Americans believed FDR could get the country out of the depression and put people back to work……

• Democrats• FDR appealed to the

common man because he was crippled

•Eleanor became the eyes and ears for her husband• Promised to help the

people through the Great Depression by direct

governmental involvement

CARTOON 1932

CARTOON 1932

• Many Americans were unsure exactly what FDR

meant with his New Deal.

• Interests group were lining up to protect their

self-interests in FDR’s New Deal.

CARTOON 1932

• President Roosevelt began the “fireside chats” on a weekly basis as a way to reassure the American people.

• His comforting voice, calming words, confidence in the country and the American people helped restore faith of the American people in democracy.

“I pledge to you, pledge myself to a NEW DEAL for the American People.” “The only thing we

have to fear…is fear itself.”